“Electronic Trading Platform” shall mean a dealing system operated by Clearcorp on which transactions in Money Market instruments, Foreign Exchange instruments, Derivatives or any other instruments of like nature as maybe specified by RBI from time to time Best mobile MT4 forex strategy Best indicator for forex mt4 mt5,free download,% profitable, Forex Trading क य ह, Forex Trading स क स आप Earning क /10/4 · Foreign Exchange Trading Platform for Retail Users: A mechanism has been proposed by RBI for improving the pricing outcome for the “retail user” under which client pricing is directly determined in the market by providing customers with access to an inter-bank electronic trading platform where bid/offers from clients and Authorised Dealer banks can be matched anonymously and blogger.comted Reading Time: 4 mins
RBI pushed trading platform to make retail forex cheaper. It benefits banks
T he Reserve Bank of India recently announced the scheduled rollout of a foreign exchange trading platform for retail customers. Indians looking to avoid paying hefty commissions while buying or selling foreign currencies will likely make use of this upcoming platform instead of being forced to approach foreign exchange dealers.
The platform, FX-Retail, is expected to pave the way for better pricing for forex transactions, although a few issues need to be ironed out. The Reserve Bank of India RBI allows any person to act as an authorised dealer AD for the purpose of dealing in foreign exchange, under Section 10 1 of the Foreign Exchange Management Act, Currently, retail customers in India are required to purchase or sell foreign exchange from an AD bank those branches that offer the facility or foreign exchange dealers.
Retail users currently do not have direct access to foreign exchange markets. Both charge a fee for each transaction. The magnitude of these charges has been a major source of concern for retail users. Also read: What it means for India to be removed from US currency manipulators watch list.
For instance, retail users typically pay a premium of almost 2 per cent while buying a foreign currency, and are charged 2 per cent of the amount as discount while selling the foreign currency to AD banks. The AD banks enjoy a wide latitude in fixing the rates for transactions. Foreign exchange trading platform rbi rates can widely differ from market rates, putting retail users at a disadvantage. Typically, foreign exchange trading platform rbi who deal in foreign exchange frequently and in large volumes enjoy greater negotiating powers with the AD banks.
This gives rise to questions about transparency in fixing of rates and the need to maintain a level-playing field among market participants. The paper categorised the foreign exchange market into two segments: inter-bank and retail. Two possible options were identified to encourage transparent pricing in foreign exchange markets. An inter-bank electronic trading platform was proposed to be created by the Clearing Corporation of India Limited CCIL. This mechanism is expected to improve transparency in pricing by fostering competition while reducing the cost of transactions and risks for AD banks.
Last week, the RBI issued a circular announcing that the trading platform, FX-Retail, foreign exchange trading platform rbi, was ready to be rolled out. While the initiative for creation of an electronic foreign exchange trading platform for retail participants is a welcome move, a few concerns remain.
The RBI circular does not provide any guidance on how such flat fees may be determined. It may be noted that the European Commission recently fined five multinational banks for participating in a foreign exchange spot trading cartel, which included coordinated trading activities. ii The RBI circular allows AD banks to put a cap on the total amount of transactions that can be undertaken by a customer on the FX-Retail portal in one day. This restriction can be imposed either across the three segments of cash, foreign exchange trading platform rbi, tom and spot, or separate limits can be prescribed for each segment.
In the event that transactions exceed the limit, a charge of 0. The circular also does not prescribe any guidance on how such limits on transactional amounts by the AD banks will be determined.
But this discretionary power given to the AD banks could potentially hamper the creation of a level-playing field in terms of the cost of accessing the foreign exchange market. Foreign exchange trading platform rbi one of the authors of this article had earlier arguedthis bifurcation weakens the principles underlying an exchange platform, which is aggregation, buying and selling orders of foreign exchange irrespective of the type of participants.
An integrated exchange would benefit retail users by providing for greater liquidity and more efficient price discovery compared to a standalone retail trading platform. Also read: India is yet to recognise the soft power of making its rupee an international currency. iv The discussion paper and the circular specify that the CCIL will operate the spot foreign exchange trading platform.
While the paper proposed that other vendors would be allowed to offer similar platforms in due course, the circular is silent on this issue, foreign exchange trading platform rbi.
However, this first-mover advantage given to the CCIL may be problematic, foreign exchange trading platform rbi. Financial market exchanges typically enjoy positive network effects. In this case, the CCIL may benefit from this positive externality by virtue of providing the sole platform for spot foreign exchange trading. A similar scenario had previously unfolded when the CCIL had obtained the sole mandate to settle all trades in the government securities G-secs market.
Though other players were allowed to participate in trading later, they could not compete against the NDS-OM exchange operated by the RBIwhich remains the largest repository of volumes and trades in G-sec trading due to the ability to provide seamless trading, settlement and clearance functions. v The framework envisaged in the circular is antithetical to the gains arising from a unified market infrastructure.
In other jurisdictions, the same platform offers a variety of services such as foreign exchange trading, bond market trading, trading of money market instruments. The regulatory oversight required is akin to that of any trading platform.
While the decision to start a retail trading platform is a laudable move, it can be improved by avoiding segmentation of market infrastructure and doing better on transparency. Radhika Pandey is a Fellow at the National Institute of Public Finance and Policy Foreign exchange trading platform rbi. Nelson Chaudhuri is a Research Fellow at the National Institute of Public Finance and Policy NIPFP.
Raghunath Seshadri is a Research Fellow at the National Institute of Public Finance and Policy NIPFP. The views and opinions expressed in this article are those of the authors and not of their institution. India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises. But the news media is in a crisis of its own. There have been brutal layoffs and pay-cuts. The best of journalism is shrinking, yielding to crude prime-time spectacle.
ThePrint has the finest young reporters, columnists and editors working for it. Sustaining journalism of this quality needs smart and thinking people like you to pay for it. Whether you live in India foreign exchange trading platform rbi overseas, you can do it here.
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MACD Trading Strategy How To Use MACD Indicator Like Pro in Forex Scalping Strategy How to Use MACD Indicator - Simple Effective Forex Trading Strategie /10/12 · Transactions in this segment are conducted through trading platforms like FXT-D2 (Thomson Reuters), FX-Clear (Clearing Corporation of India Limited (CCIL)) etc. before being settled by CCIL (for Cash, Tom, Spot and Forward USD-INR transactions) through a process of multilateral netting “Electronic Trading Platform” shall mean a dealing system operated by Clearcorp on which transactions in Money Market instruments, Foreign Exchange instruments, Derivatives or any other instruments of like nature as maybe specified by RBI from time to time
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